The car industry investment is expected to secure more than 30,000 jobs. Photograph: Martin Rickett/PA

A £1bn motor industry initiative that could create thousands of jobs has been announced by the business secretary, Vince Cable.

The government and the automotive industry will invest £500m each over the next 10 years in an Advanced Propulsion Centre (APC) to research, develop and commercialise the technologies for the vehicles of the future.

This financial commitment is backed by 27 companies in the motor industry sector, including supply chain companies, and it is expected to secure at least 30,000 jobs currently linked to producing engines and create many more in the supply chain.

It was also announced that the Automotive Council, co-chaired by Cable and Prof Richard Parry-Jones, is aiming to recruit more than 7,600 apprentices and 1,700 graduates over the next five years.

In addition, the newly created Automotive Investment Organisation will aim to double the number of jobs created or secured in the automotive supply chain over the next three years to 15,000.

In a further announcement, the Technology Strategy Board launched a £10m competition that could see successful projects fast-tracked for commercialisation through the APC. Businesses are being invited to bid for support on innovative, collaborative low-carbon vehicle projects.

Announcing the total initiative with Parry-Jones at the Goodwood Festival of Speed in West Sussex, Cable said: "The UK automotive sector has been incredibly successful in recent times, with billions of pounds of investment and new jobs. This has been achieved by government and industry working together.

"With the next generation of vehicles set to be powered by radically different technologies we need to maintain this momentum and act now. Our industrial strategy will ensure we keep on working together to make our automotive industry a world leader."

Parry-Jones said: "Businesses prefer consistency, stability and a clear path to the future in order to make investment plans.

"Driving Success, the automotive industrial strategy, sets out how industry will work together with government over the next 20 or 30 years. This is critical to sustaining and growing a thriving UK automotive sector in a highly competitive global industry."

Mike Baunton, interim chief executive of the Society of Motor Manufacturers and Traders, said: "The motor industry is a major contributor to the UK economy and has been increasing that contribution in a challenging economic environment.

"In partnership with government, we have now developed a road map to secure further long-term growth that is detailed in the strategy document launched today. Our goals are to grow vehicle production and component supply with more investment, jobs and advanced technology developed in the UK."

The Technology Strategy Board's chief executive, Iain Gray, said: "This automotive strategy is the result of a great deal of effort over a number of years from all parties in the automotive sector and government.

"We have an agreed way forward which will give stability and momentum to the transport industry in this country. It will give businesses – large and small – the confidence to plan for the future in the UK."